Family Issues : What Do These Small Businesses Need? What Every Business and Resident Wants and Needs

As politicians do everywhere, both candidates in Los Angeles’ election, Mayor Richard Riordan and challenger Tom Hayden, kicked off their campaigns recently with cliches about the need to support “minority-owned businesses.”

But such sentiments are faintly patronizing and make it sound like there’s a sick ward for business in Southern California when, in fact, the region is one of the most energetic entrepreneurial environments in the world.

It’s led by family businesses that want only what every kind of business and resident wants: safe streets and better schools. A look at several of these family businesses will tell you more about the vigorous Southern California economy--and what small businesses’ real concerns are--than a hundred political speeches.

F. Gavina & Sons is a specialty coffee company, located for the last 30 years in Vernon and descended from a 100-year-old coffee business in Cuba. What does the Gavina family business want from local governments and politics? “Safe homes and streets for our employees, good schools for their children,” says Leonor Gavina, daughter of founder Francisco, who runs the company with her three brothers.

Luis Saavedra, who runs the Tapatio Hot Sauce company with his father, also asks for safer streets to help retailers and draw larger stores back to poor neighborhoods.

And the Rodriguez family of Mercado Latino, a food distribution business in Industry, would like faster inspection of imported fresh produce at the ports of Los Angeles and Long Beach because they can’t sell plantains and cassava roots that have sat for two weeks.

All three of those companies have been in business 30 years or less. Yet they have grown to considerable size, with product distribution beyond this region, because of Southern California’s large and changing food markets--and their own entrepreneurial energy.

Mercado Latino was founded in 1967 by Graciliano Rodriguez, who bused tables at the Long Beach Elks Club and held down two janitorial jobs to support his family while starting his own produce business catering to the tastes of Spanish-speaking people.

“The terms ‘Hispanic’ and ‘Latino’ get involved in political-correctness arguments, so we say our products are for the Spanish taste,” says Richard Rodriguez, senior vice president for marketing and one of Graciliano’s four sons and a daughter who now run the company day to day.

The Rodriguezes came from Cuba in 1962, but finding no jobs in Miami they continued on to Long Beach, where much of the family lives. Graciliano, now 81 and still in the warehouse every day, began by purchasing tropical specialties at Los Angeles central markets and selling them to his neighbors. Soon he was selling from a van, then from a leased stall at the market.

“In those days, supermarkets didn’t stock Spanish specialties. If you wanted them, you would have to drive for miles,” says Jorge Rodriguez, chief financial officer of Mercado Latino.

Today the company has 450 employees and does $120 million a year in sales of Faraon and other brands of food and fresh produce in California, Texas and other Western states. And its foods are crossing over to mainstream American menus--including nopales (cactus), which “are becoming popular because they are low in cholesterol,” says Jorge Rodriguez.

Francisco Gavina also emigrated from Cuba and worked in restaurants before starting coffee roasting. Initially, the company made espresso, but then developed gourmet coffees as demand from restaurants and ethnic specialty stores grew. “This was before Seattle caught on to the gourmet coffee trend,” says Leonor Gavina.

The Southern California market offered varied opportunities. Gavina makes coffee blends to Armenian and Vietnamese tastes. And it makes the coffee in this region for McDonald’s. A dozen years ago, the hamburger chain was looking for a minority supplier, and Los Angeles-based Banco Popular recommended its client, the Gavina company. Now Gavina has 170 employees and $46 million in annual sales--6% of them to McDonald’s, 15% to supermarkets and the rest to specialty stores and restaurants.

Its coffees are distributed in Florida, Georgia and Alabama, and within a few years it will need more space than it now occupies in five clustered buildings.

Southern California leads the national taste in other foods too. Tapatio Hot Sauce is the product of a Vernon company started 24 years ago by Luis Saavedra Sr. after he was laid off by an aerospace company. Saavedra, who emigrated from Guadalajara--tapatio is a nickname for people from that city in Mexico--made the sauce from a family recipe, starting out in a 480-square-foot facility near Huntington Park.

Today the sauce, sweeter and less fiery than the Louisiana varieties, is distributed nationwide and overseas. And the company has just moved into a new 30,000-square-foot factory.

With all their success, what do such companies need? They may need counseling. UCLA’s Anderson School has set up a Family Business Center to advise companies on generational transition, public stock sales and other questions.

And they may need to consolidate, says Danny Villanueva, head of Bastion Capital, a venture firm. Villanueva sees national corporations such as Procter & Gamble getting into the specialty food and coffee business. He believes this area’s food companies would be better off combining into a single giant entity, comparable to Goya Foods, the $560-million-sales Secaucus, N.J., firm that serves East Coast Latino markets.

But Southern California’s companies, some still led by their founders, reckon they’ll be better off for a generation or so running on family energy. And they may be right. That’s the force that built this region’s economy in the first place.